What Is Mortgage Refinancing and When Does It Actually Save You Money?
3. Mortgage Refinancing Types
Selecting the best refinance option for your financial circumstances can be made easier if you are aware of the various possibilities available.
A. Refinance with Rate and Term
The most prevalent kind of refinance is this one. Without affecting the total amount of your loan, it modifies either your interest rate, the length of your loan, or both.
Ideal for:
Reducing your monthly installments
Changing the kind of loan
Getting your loan paid off sooner
B. A Cash-Out Loan
This enables you to borrow more money and keep the difference as cash than you currently owe. It is a means of gaining access to home equity.
For instance:
Value of the house: $400,000.
$250,000 is the current loan balance.
$300,000 is the new loan.
$50,000 in cash received (less fees)
Ideal for:
Consolidating debt
Home renovations
Emergency costs
C. Simplify Your Refinance
A streamline refinance, which is available for some loan types like as FHA, VA, or USDA, results in a faster closing, less paperwork, and no appraisal.
Ideal for:
Homeowners who currently owe money to the government
People who want to lower payments without complete underwriting
